Section 1. K.S.A. 1998 Supp. 40-112
is hereby amended to read as
follows: 40-112. (a) For the purpose of maintaining the insurance
de-
partment and the payment of expenses incident thereto, there is
hereby
established the insurance department service regulation fund in the
state
treasury which shall be administered by the commissioner of
insurance.
All expenditures from the insurance department service regulation
fund
shall be made in accordance with appropriation acts upon warrants
of the
director of accounts and reports issued pursuant to vouchers
approved
by the commissioner of insurance or by a person or persons
designated
by the commissioner.

(b) On and after the effective date of
this act, all fees received by the
commissioner of insurance pursuant to any statute and 1% of taxes
re-
ceived pursuant to K.S.A. 40-252 and amendments thereto shall be
re-
mitted to the state treasurer for deposit in the state treasury and
credited
to the insurance department service regulation fund.

(c) Except as otherwise provided by this
section, the commissioner
of insurance shall make an annual assessment on each group of
affiliated
insurers whose certificates of authority to do business in this
state are in
good standing at the time of the assessment. The total amount of
all such
assessments for a fiscal year shall be equal to the amount
sufficient which,
when combined with the total amount to be credited to the
insurance
department service regulation fund pursuant to subsection (b) is
equal to
the amount approved by the legislature to fund the insurance
company
regulation program. With respect to each group of affiliated
insurers, such
assessment shall be in proportion to the amount of total assets of
the
group of affiliated insurers as reported to the commissioner of
insurance
pursuant to K.S.A. 40-225 and amendments thereto for the
immediately
preceding calendar year, shall not be less than $500 and shall not
be more
than the amount equal to .0000015 of the amount of total assets of
the
group of affiliated insurers or $25,000, whichever is less. The
total as-
sessment for any fiscal year shall not increase by any amount
greater than
15% of the total budget approved by the legislature to fund the
insurance
company regulation program for the fiscal year immediately
preceding
the fiscal year for which the assessment is made. In the event the
total
amount of the assessment would be less than the aggregate amount
re-
sulting by assessing the $500 minimum on each insurer, the
commissioner
may establish a lower minimum to be assessed equally on each
insurer.

(d) If, by the laws of any state other
than Kansas or by the retaliatorylaws of any state other than Kansas, any insurer domiciled in
Kansas shallbe required to pay any fee or tax in such other state of
licensure, and thefee or tax is due and payable either because the insurance
departmentservice regulation fee imposed by this section on insurers
licensed in Kan-sas and organized or domiciled in such other state is greater
than thecomparable fee or tax assessed in such other state, or such
other state hasno comparable fee or tax but requires payment on a retaliatory
basis, thento the extent such fee or tax amounts are legally due and are
paid in suchother state, any insurer domiciled in Kansas may claim a
dollar-for-dollarcredit for such fees paid against insurer's annual premium taxes
due thestate of Kansas under K.S.A. 40-252 and amendments thereto or
privilegefee due the state of Kansas under K.S.A. 40-3213 and amendments
thereto,but such credit shall only be calculated on the amount which
would nothave been required to be paid in such other state of licensure
in the ab-sence of the existence of the insurance department service
regulation feeimposed by this section, and in no event shall the credit
permitted by thissection exceed 90% of the insurer's annual premium tax or
privilege feedue the state of Kansas. The insurance commissioner shall
prescribe theforms for reporting such credits.

(d)(e) Assessments payable under this section shall be
past due if not
paid to the insurance department within 45 days of the billing date
of
such assessment. A penalty equal to 10% of the amount assessed
shall be
imposed upon any past due payment and the total amount of the
assess-
ment and penalty shall bear interest at the rate of 1.5% per month
or any
portion thereof.

(e)(f) When
there exists in the insurance department service regu-
lation fund a deficiency which would render such fund temporarily
in-
sufficient during any fiscal year to meet the insurance
department's fund-
ing requirements, the commissioner of insurance shall certify the
amount
of the insufficiency. Upon receipt of any such certification, the
director
of accounts and reports shall transfer an amount of moneys equal to
the
amount so certified from the state general fund to the insurance
depart-
ment service regulation fund. On June 30 of any fiscal year during
which
an amount or amounts are certified and transferred under this
subsection,
the director of accounts and reports shall provide for the
repayment of
the amounts so transferred and shall transfer the amount equal to
the
total of all such amounts transferred during the fiscal year from
the in-
surance department service regulation fund to the state general
fund.

(f)(g) Any
unexpended balance in the insurance department service
regulation fund at the close of a fiscal year shall remain credited
to the
insurance department service regulation fund for use in the
succeeding
fiscal year and shall be used to reduce future assessments or to
accom-
modate cash flow demands on the fund.

(g)(h) The
commissioner of insurance shall exempt the assessment
of any insurer which, as of December 31 of the calendar year
preceding
the assessment, has a surplus of less than two times the minimum
amount
of surplus required for a certificate of authority on and after May
1, 1994,
and which is subject to the premium tax or privilege fee
liability imposed
on insurers organized under the laws of this state. The
commissioner of
insurance may also exempt or defer, in whole or in part, the
assessment
of any other insurer if, in the opinion of the commissioner of
insurance,
immediate payment of the total assessment would be detrimental to
the
solvency of the insurer.

(h)(i) As used
in this section:

(1) ``Affiliates'' or ``affiliated'' has
the meaning ascribed by K.S.A. 40-
3302 and amendments thereto;

(2) ``group'' or ``group of affiliated
insurers'' means the affiliated in-
surers of a group and also includes an individual, unaffiliated
insurer; and

(3) ``insurer'' means any insurance
company, as defined by K.S.A. 40-
201 and amendments thereto, any fraternal benefit society, as
defined by
K.S.A. 40-738 and amendments thereto, any reciprocal or
interinsurance
exchange under K.S.A. 40-1601 through 40-1614 and amendments
thereto, any mutual insurance company organized to provide health
care
provider liability insurance under K.S.A. 40-12a01 through 40-12a09
and
amendments thereto, any nonprofit dental service corporation
under
K.S.A. 40-19a01 through 40-19a14 and amendments thereto, any
non-
profit medical and hospital service corporation under K.S.A.
40-19c01
through 40-19c11 and amendments thereto, any health maintenance
or-
ganization, as defined by K.S.A. 40-3202 and amendments thereto, or
any
captive insurance company, as defined by K.S.A. 40-4301 and
amend-
ments thereto, which is authorized to do business in Kansas.

(b) Whenever the commissioner shall deem
it necessary the com-
missioner may make, or direct to be made, an examination of the
affairs
and the financial condition of any pool, except that once every
five years
the commissioner shall conduct an examination of the affairs and
the
financial condition of each pool. Each pool shall submit a
certified inde-
pendent audited financial statement no later than 90 days after the
end
of the fiscal year. The financial statement shall include
outstanding re-
serves for claims and for claims incurred but not reported. Each
pool
shall file reports as to income, expenses and loss data at such
times and
in such manner as the commissioner shall require. Any pool which
doesnot use rates developed by an approved rating organization shall
file withthe commissioner an actuarial certification that such rates are
actuariallysound. Whenever it appears to the commissioner from such
examination
or other satisfactory evidence that the ability to pay current and
future
claims of any such pool is impaired, or that it is doing business
in violation
of any of the laws of this state, or that its affairs are in an
unsound con-
dition so as to endanger its ability to pay or cause to be paid
claims in the
amount, manner and time due, the commissioner shall, before filing
such
report or making the same public, grant such pool upon reasonable
notice
a hearing, and, if on such hearing the report be confirmed, the
commis-
sioner shallmay require any of the actions
allowed under K.S.A. 40-222band amendments thereto or suspend the certificate of
authority for such
pool until its ability to pay current and future claims shall have
been fully
restored and the laws of the state fully complied with. The
commissioner
may, if there is an unreasonable delay in restoring the ability to
pay claims
of such pool and in complying with the law or if rehabilitation
or correc-tive action taken under K.S.A. 40-222b and amendments thereto is
un-successful, revoke the certificate of authority of such pool
to do business
in this state. Upon revoking any such certificate the commissioner
shall
communicate the fact to the attorney general, whose duty it shall
be to
commence and prosecute an action in the proper court to dissolve
such
pool or to enjoin the same from doing or transacting business in
this state.
The commissioner of insurance may call a hearing under K.S.A.
40-222b,
and amendments thereto, and the provisions thereof shall apply to
group-
funded pools.

(c) On an annual basis, or within 30
days of any change thereto, eachpool shall supply to the commissioner the name and
qualifications of thedesignated administrator of the pools and the terms of the
specific andaggregate excess insurance contracts of the pool.

Sec. 3. K.S.A. 1998 Supp. 12-2621
is hereby amended to read as
follows: 12-2621. (a) With respect to the categories of coverage
described
in subparagraphs (d)(1) through (4) of K.S.A. 12-2618, and
amendments
thereto, premium contributions to the pool shall be based upon
appro-
priate manual classification and rates, plus or minus applicable
experience
credits or debits, and minus any advance discount approved by the
trus-
tees, not to exceed 25% of manual premium. The pool shall use
rules,
classifications and rates as promulgated by an approved rating
organiza-
tion for workers compensation if the pool has been in operation for
less
than five years. Such rates shall either be the rates effective
June 1, 1994,
or the prospective loss costs, as defined in K.S.A. 40-1113c, and
amend-
ments thereto, plus expenses necessary to administer the pool. For
pur-
poses of subsection (b), the prospective loss costs shall be
presumed to
be the 70% required to be deposited in the claims fund. If the pool
has
been in operation for more than five years, the board of trustees
may
determine such rates and discounts as approved by the
commissioner.
Premium contributions to the pool for all other lines of insurance
shall
be based on rates filed by a licensed rating organization or on
rates of
certain companies filing rates with the commissioner and approved
by
the commissioner for the pool. In lieu of the foregoing, the board
of
trustees may determine such classification, rates and discounts as
ap-
proved by the commissioner.

Premium contributions to any pool providing
life insurance or any pool
providing group sickness and accident insurance as described in
K.S.A.
12-2617, and amendments thereto, shall be based on sound actuarial
prin-
ciples.

(b) An amount equal to at least 70% of
the annual premium shall be
maintained in a designated depository for the purpose of paying
claims
in a claims fund account. If the pool has been in operation for
more thanfive years the commissioner may authorize allocation of a
differentamount to the claims fund account, if solvency of the pool would
not beendangered. The remaining annual premium shall be placed
into a des-
ignated depository for the payment of taxes, fees and
administrative and
other operational costs in an administrative fund account.

(c) Any moneys for a fund year in excess
of the amount necessary to
fulfill all obligations of the pool for that fund year, including
any obligation
to retain adequate surplus funds, as defined by subsection (h) of
K.S.A.
12-2618, and amendments thereto, in lieu of specific and aggregate
excess
insurance, may be declared to be refundable by the trustees not
less than
12 months after the end of the fund year. Any such refund shall be
paid
only to those members who remained participants in the pool for an
entire
year. Payment of previously earned refunds shall not be contingent
on
continued membership in the pool.

Sec. 4. K.S.A. 12-2622 is hereby
amended to read as follows: 12-
2622. The trustees shall not utilize any of the contributions
collected as
premiums for any purpose unrelated to the pool. Moneys not needed
for
current obligations may be invested by the trustees. Such
investmentsshall be limited to bonds or other evidences of
indebtedness issued, as-sumed or guaranteed by the United States of America, or by
any agencyor instrumentality thereof; in certificates of deposit in a
federally insuredbank located in Kansas; or in shares or savings deposits in
a federallyinsured savings and loan association located in
KansasSuch investmentsshall be limited to investments permitted by K.S.A. 12-1677b and
75-4209and amendments thereto, except that a pool which has been in
existencefor at least five years shall be permitted to invest in any of
the securitiesor other investments permitted by article 2a of chapter 40 of
the KansasStatutes Annotated.

Sec. 5. K.S.A. 1998 Supp. 44-584 is
hereby amended to read as fol-
lows: 44-584. (a) The application for a new certificate shall be
signed by
the trustees of the trust fund created by the pool. Any application
for a
renewal of an existing certificate shall meet at least the
standards estab-
lished in subsections (f), (g), (h), (i), (j), (k), (l), (m) and
(n) of K.S.A. 44-
582 and amendments thereto. After evaluating the application the
com-
missioner shall notify the applicant that the plan submitted is
approved
or conversely, if the plan submitted is inadequate, the
commissioner shall
then fully explain to the applicant what additional requirements
must be
met. If the application is denied, the applicant shall have 15 days
to make
an application for hearing by the commissioner after service of the
denial
notice. The hearing shall be conducted in accordance with the
provisions
of the Kansas administrative procedure act.

(b) An approved certificate of authority
shall remain in full force and
effect until such certificate is suspended or revoked by the
commissioner.
An existing pool operating under an approved certificate of
authority must
file with the commissioner, within 120 days following the close of
the
pool's fiscal year, a current financial statement on a form
approved by the
commissioner showing the financial ability of the pool to meet its
obli-
gations under the worker compensation act and confirmation of
specific
and aggregate excess insurance as required by law for the pool. If
an
existing pool's certificate of authority is suspended or revoked,
such pool
shall have the same rights to a hearing by the commissioner as for
appli-
cants for new certificates of authority as set forth in subsection
(a) above.

(c) Whenever the commissioner shall deem
it necessary the commis-
sioner may make, or direct to be made, an examination of the
affairs and
financial condition of any pool in accordance with K.S.A. 40-222
andK.S.A. 40-223 and amendments thereto, except that once every
five years
the commissioner shall conduct an examination of the affairs and
financial
condition of each pool. Each pool shall submit a certified
independent
audited financial statement no later than 90 days after the end of
the
pool's fiscal year. The financial statement shall include
outstanding re-
serves for claims and for claims incurred but not reported. Each
pool
shall file payroll records, accident experience and compensation
reports
and such other reports and statements at such times and in such
manner
as the commissioner shall require. Whenever it appears to the
commis-
sioner from such examination or other satisfactory evidence that
the sol-
vency of any such pool is impaired, or that it is doing business in
violation
of any of the laws of this state, or that its affairs are in an
unsound con-
dition so as to endanger its ability to pay or cause to be paid the
com-
pensation in the amount, manner and time due as provided for in
the
Kansas workers compensation act, the commissioner shall, before
filing
such report or making the same public, grant such pool upon
reasonable
notice a hearing in accordance with the provisions of the Kansas
admin-
istrative procedure act, and, if on such hearing the report be
confirmed,
the commissioner shall suspend the certificate of authority for
such pool
until its solvency shall have been fully restored and the laws of
the state
fully complied with. The commissioner may, if there is an
unreasonable
delay in restoring the solvency of such pool and in complying with
the
law, revoke the certificate of authority of such pool to do
business in this
state. Upon revoking any such certificate the commissioner shall
com-
municate the fact to the attorney general, whose duty it shall be
to com-
mence and prosecute an action in the proper court to dissolve such
pool
or to enjoin the same from doing or transacting business in this
state. The
commissioner of insurance may call a hearing under K.S.A. 40-222b,
and
amendments thereto, and the provisions shall apply to group
workers
compensation pools.

Sec. 6. K.S.A. 1998 Supp. 44-585 is
hereby amended to read as fol-
lows: 44-585. (a) Premium contributions to the pool shall be based
upon
appropriate manual classification and rates, plus or minus
applicable ex-
perience credits or debits, and minus any advance discount approved
by
the trustees, not to exceed 15% of manual premium. The pool must
use
rules, classifications and rates as promulgated by an approved
rating or-
ganization and must report premium and loss data to a rating
organization.
Such rates shall either be the rates effective June 1, 1994, or the
pro-
spective loss costs, as defined in K.S.A. 40-1113, and
amendments
thereto, plus expenses necessary to administer the pool. For
purposes of
subsection (b) the prospective loss costs shall be presumed to be
the 70%
required to be deposited in the claims fund. If the pool has been
in
operation for more than five years, the board of trustees may
determine
such rates as approved by the commissioner.

(b) At least 70% of the annual premium
shall be placed into a des-
ignated depository for the sole purpose of paying claims. If so
approved
by the commissioner of insurance, the annual premium to be
designated
to such depository may be determined to be the net amount of
premium
after all or a portion of the specific and aggregate excess
insurance pre-
mium costs have been paid. This shall be called the claims fund
account.
The remaining annual premium shall be placed into a designated
depos-
itory for the payment of taxes, fees and administrative costs. This
shall be
called the administrative fund account. If a pool has been in
operation formore than five years, the commissioner may authorize allocation
of adifferent amount to the claims fund account, if solvency of the
pool wouldnot be endangered.

(c) Any surplus moneys for a fund year in
excess of the amount nec-
essary to fulfill all obligations under the workers compensation
act for
that fund year may be declared to be refundable by the trustees not
less
than 12 months after the end of the fund year, upon the approval of
the
commissioner. Such approval can be obtained only upon satisfactory
ev-
idence that sufficient funds remain on deposit for the payment of
all
outstanding claims and expenses, including incurred but not
reported
claims. Any such refund shall be paid only to those employers who
re-
mained participants in the pool for an entire year. Payment of
previously
earned refunds shall not be contingent on continued membership in
the
pool.

Sec. 7. K.S.A. 44-586 is hereby
amended to read as follows: 44-586.
The trustees shall not utilize any of the moneys collected as
premiums
for any purpose unrelated to Kansas workers' compensation. Moneys
not
needed for current obligations may be invested by the trustees.
Suchinvestments shall be limited to bonds or other evidences of
indebtednessissued, assumed or guaranteed by the United States of
America, or byany agency or instrumentality thereof; in certificates of
deposit in a fed-erally insured bank; or in shares or savings deposits in a
federally insuredsavings and loan associationUnless authorized
elsewhere in this act, allfunds of a pool shall be invested only in securities or other
investmentspermitted by article 2a of chapter 40 of the Kansas Statutes
Annotated,or such other securities or investments as the commissioner may
permit.

New Sec. 8. The purpose of sections
8 through 14 is to provide the
state of Kansas with a comprehensive body of law for the effective
reg-
ulation and supervision of title insurance agencies engaged in
settlement
and closing of the sale of an interest in real estate.

New Sec. 9. As used in this act,
unless the context otherwise re-
quires:

(a) ``Commissioner'' means the
commissioner of insurance of the
state of Kansas.

(b) ``Escrow'' means written instruments,
money or other items de-
posited by one party with a depository, escrow agent or escrow for
deliv-
ery to another party upon the performance of a specified condition
or the
happening of a certain event.

(1) Organized or (in the case of a U.S.
branch or agency office of a
foreign banking organization) licensed under the laws of the United
States
or any state and has been granted authority to operate with
fiduciary
powers;

(2) regulated, supervised and examined by
federal or state authorities
having regulatory authority over banks and trust companies;

(3) insured by the appropriate federal
entity; and

(4) qualified under any additional rules
established by the commis-
sioner.

(e) ``Title insurance agent'' or
``agent'' means an authorized person,
other than a bona fide employee of the title insurer who, on behalf
of the
title insurer, performs the following acts, in conjunction with the
issuance
of a title insurance report or policy:

(1) Determines insurability and issues
title insurance reports or pol-
icies, or both, based upon the performance or review of a search,
or an
abstract of title;

(2) collects or disburses premiums,
escrow or security deposits or
other funds;

(3) handles escrow, settlements or
closings;

(4) solicits or negotiates title
insurance business; or

(5) records closing documents.

(f) ``Title insurer'' or ``insurer''
means a company organized under
laws of this state for the purpose of transacting the business of
title in-
surance and any foreign or non-U.S. title insurer licensed in this
state to
transact the business of title insurance.

(g) ``Title insurance policy'' or
``policy'' means a contract insuring or
indemnifying owners of, or other persons lawfully interested in,
real or
personal property or any interest in real property, against loss or
damage
arising from any or all of the following conditions existing on or
before
the policy date and not excepted or excluded:

(1) Defects in or liens or encumbrances
on the insured title;

(2) unmarketability of the insured
title;

(3) invalidity, lack of priority, or
unenforceability of liens or encum-
brances on the stated property;

(4) lack of legal right of access to the
land; or

(5) unenforceability of rights in title
to the land.

New Sec. 10. A title insurance
agent may operate as an escrow, set-
tlement or closing agent, provided that:

(a) All funds deposited with the title
insurance agent in connection
with an escrow, settlement or closing shall be submitted for
collection to,
invested in or deposited in a separate fiduciary trust account or
accounts
in a qualified financial institution no later than the close of the
next busi-
ness day, in accordance with the following requirements:

(1) The funds shall be the property of
the person or persons entitled
to them under the provisions of the escrow, settlement or closing
agree-
ment and shall be segregated for each depository by escrow,
settlement
or closing in the records of the title insurance agent in a manner
that
permits the funds to be identified on an individual basis;

(2) the funds shall be applied only in
accordance with the terms of
the individual instructions or agreements under which the funds
were
accepted; and

(3) an agent shall not retain any
interest on any money held in an
interest-bearing account without the written consent of all parties
to the
transaction.

(b) Funds held in an escrow account shall
be disbursed only:

(1) Pursuant to written authorization of
buyer and seller;

(2) pursuant to a court order; or

(3) when a transaction is closed
according to the agreement of the
parties.

(c) A title insurance agent shall not
commingle the agent's personal
funds or other moneys with escrow funds. In addition, the agent
shall not
use escrow funds to pay or to indemnify against the debts of the
agent or
of any other party. The escrow funds shall be used only to fulfill
the terms
of the individual escrow and none of the funds shall be utilized
until the
necessary conditions of the escrow have been met. All funds
deposited
for real estate closings, including closings involving refinances
of existing
mortgage loans, which exceed $2,500 shall be in one of the
following
forms:

(1) Lawful money of the United
States;

(2) wire transfers such that the funds
are unconditionally received by
the title insurance agent or the agent's depository;

(3) cashier's checks, certified checks or
bank money orders issued by
a federally insured financial institution and unconditionally held
by the
title insurance agent;

(4) funds received from governmental
entities or drawn on an escrow
account of a real estate broker licensed in the state or drawn on
an escrow
account of a title insurer or title insurance agent licensed to do
business
in the state; or

(5) other negotiable instruments which
have been on deposit in the
escrow account at least 10 days.

(d) Each title insurance agent shall have
an audit made of its escrow,
settlement and closing deposit accounts, conducted by a certified
public
accountant or by a title insurer for which the title insurance
agent has a
licensing agreement, according to the following schedule. Audits
shall be
considered current if dated within the 12 months prior to
submission of
the audit as required herein. The title insurance agent shall
provide a
copy of the audit report to the commissioner and to each title
insurance
company which it represents within 160 days after the close of the
cal-
endar year for which an audit is required. Title insurance agents
who are
attorneys and who issue title insurance policies as part of their
legal rep-
resentation of clients are exempt from the requirements of this
subsec-
tion. However, the title insurer, at its expense, may conduct or
cause to
be conducted an annual audit of the escrow, settlement and closing
ac-
counts of the attorney. Attorneys who are exclusively in the
business of
title insurance are not exempt from the requirements of this
subsection.
Audits shall be required as follows:

(1) Annual audit required in counties
having a population of 40,001
and over;

(2) biennial audit required in counties
having a population of 20,001
- 40,000; and

(3) triennial audit required in counties
having a population of 20,000
or under.

(e) The commissioner may promulgate rules
and regulations setting
forth the standards of the audit and the form of audit report
required.

(f) If the title insurance agent is
appointed by two or more title in-
surers and maintains fiduciary trust accounts in connection with
providing
escrow and closing settlement services, the title insurance agent
shall
allow each title insurer reasonable access to the accounts and any
or all
of the supporting account information in order to ascertain the
safety and
security of the funds held by the title insurance agent.

(g) Nothing in this section is intended
to amend, alter or supersede
other laws of this state or the United States, regarding an escrow
holder's
duties and obligations.

New Sec. 11. (a) The title
insurance agent shall maintain sufficient
records of its escrow operations and escrow trust accounts so that
the
commissioner may adequately ensure that the title insurance agent
is in
compliance with all provisions of sections 8 through 14 and
amendments
thereto. The commissioner may prescribe the specific record entries
and
documents to be kept and the length of time for which the records
must
be maintained.

(b) The title insurance agent shall make
available for inspection by
the commissioner, or the commissioner's representatives, all
records re-
lating to the title insurance agent's escrow, settlement and
closing busi-
ness, and any other fiduciary trust accounts required to be kept by
the
title insurance agent. Such availability for inspection shall
include any
records to which subsection (f) of section 10 and amendments
thereto
applies.

New Sec. 12. (a) The title
insurance agent who handles escrow, set-
tlement or closing accounts shall file with the commissioner a
surety bond
or irrevocable letter of credit in a form acceptable to the
commissioner,
issued by an insurance company or financial institution authorized
to con-
duct business in this state, securing the applicant's or the title
insurance
agent's faithful performance of all duties and obligations set out
in sec-
tions 8 through 14 and amendments thereto.

(b) The terms of the bond or irrevocable
letter of credit shall be:

(1) The surety bond shall provide that
such bond may not be termi-
nated without 30 days prior written notice to the commissioner.

(2) An irrevocable letter of credit shall
be issued by a bank which is
insured by the federal deposit insurance corporation or its
successor if
such letter of credit is initially issued for a term of at least
one year and
by its terms is automatically renewed at each expiration date for
at least
an additional one-year term unless at least 30 days prior written
notice of
intention not to renew is given to the commissioner of
insurance.

(c) The amount of the surety bond or
irrevocable letter of credit for
those agents servicing real estate transactions on property located
in coun-
ties having a certain population shall be required as follows:

(1) $100,000 surety bond or irrevocable
letter of credit in counties
having a population of 40,001 and over;

(2) $50,000 surety bond or irrevocable
letter of credit in counties
having a population of 20,001 to 40,000; and

(3) $25,000 surety bond or irrevocable
letter of credit in counties
having a population of 20,000 or under.

(d) The surety bond or irrevocable letter
of credit shall be for the
benefit of any person suffering a loss if the title insurance agent
converts
or misappropriates money received or held in escrow, deposit or
trust
accounts while acting as a title insurance agent providing any
escrow or
settlement services.

New Sec. 13. The commissioner may
issue rules, regulations and or-
ders necessary to carry out the provisions of sections 8 through 14
and
amendments thereto.

New Sec. 14. If the commissioner
determines that the title insurance
agent or any other person has violated this act, or any rules and
regulation
or order promulgated thereunder, after notice and opportunity to
be
heard, the commissioner may order that such person be subject to
the
penalties provided in K.S.A. 40-2406 et seq. and amendments
thereto.